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Saturday, July 31, 2010

Sander & Yakowitz: Grades, Not Law School Rank, Determine Future Salary

Richard Sander (UCLA) & Jane Yakowitz (Brooklyn) have posted The Secret of My Success: How Status, Prestige and School Performance Shape Legal Careers on SSRN. Here is the abstract:
Rewards are distributed more unevenly within the legal profession than in virtually any other occupation. Most of those who study the careers of lawyers would agree that law school eliteness, law school grades, and social status each play a role in determining which lawyers capture the greatest rewards. But remarkably little effort has been made to directly compare these inputs in explaining career outcomes, to see which of the three matters most, and how they interact.

In this paper, we first examine general beliefs about the importance each of these three factors has upon lawyer careers – beliefs among academics as well as beliefs among the actual participants in the sorting process. We next present some specific findings about each of the three factors. Finally, we directly compare the three factors in regression models of career outcomes. The consistent theme we find throughout this analysis is that performance in law school – as measured by law school grades – is the most important predictor of career success. It is decisively more important than law school “eliteness.” Socioeconomic factors play a critical role in shaping the pool from which law students are drawn, but little or no discernible role in shaping post-graduate careers. Since the dominant conventional wisdom says that law school prestige is all-important, and since students who “trade-up” in school prestige generally take a hit to their school performance, we think prospective students are getting the wrong message

WSJ Law Blog, New Study: Forget the Rankings, Just Bring Home Straight A’s:

Go to the best law school you get into.

It’s advice that’s been passed down through the ages, from generation to generation. Law is a profession that trades, the thinking goes, on prestige. Clients like prestigious names like Wachtell and Cravath; the wealthiest firms like names like Harvard, Yale and Chicago. Get into one of those schools, and up go your chances of going to a big firm, kicking tail, making partner and grabbing that brass ring.

Or so the conventional wisdom has for decades dictated.

But is it true? ... [Sander] and Yakowitz found that “higher performance produces a much larger dividend than eliteness does.” They write:

As an illustrative hypothetical, imagine an average student (GPA 3.25‐3.5) at 47th ranked University of Florida. Using the fifth column from Table 11 (AJD regressions on salary), we can predict how her earnings would be affected under various counterfactuals. If she had attended 20th ranked George Washington University, her grades likely would have slipped to the 2.75‐3.0 range, and her salary would drop considerably (by 22%, all other factors held constant.) Even if she had managed to get a spot at 7th ranked UC Berkeley, where the tier premiums are highest, her grades likely would have fallen into the 2.5‐2.75 range, and her salary would be 7% lower. On the other hand, if she had attended 80th ranked Rutgers, she probably could have improved her grades to land in the 3.5‐3.75 range, and earned a 13% higher salary.

Update:

http://taxprof.typepad.com/taxprof_blog/2010/07/sander-yakowitz-.html

Law School Rankings, Legal Education, Scholarship | Permalink

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Comments

I don't understand. Their chart on page 21 (fig. 2) seems to contradict their thesis. That chart shows that top 20 school student make far more than other schools (but it does also show that after the top 20 schools are more or less equal). Their claim is that if the bottom of the class top 20 students went to lower ranked schools they would be top of the class, and thus make more, but this seems highly speculative.

Posted by: anon | Jul 31, 2010 7:04:46 PM

The fact is the academic system we use was developed in the 1800s with no major changes since then when it comes to grading. The ELO system, devloped by Alpred Elo at the University of Chicago, modified and used un Chess, table tennis,foosball etc. could give a better overall competence in a field. The legal profession, always the last to change, still uses the ABC method to account for competence. A matrix of standarized test given throughout the year or on each individual subject would be a better method to account for knowledge in a certain field. The CLEP test do this well in certain subjects. Uniform and standarized one then could compare a Stanford grad with a Miami grad. However, their is no incentive to do this method.

Posted by: Nick Paleveda MBA J.D. LL.M | Aug 1, 2010 8:38:03 AM

Transfer students who do well at the transferee school (i.e.: the vast majority of transfer students) seriously undermine a lot of this article's analysis.

The article also fails to take account of the fact that in the current climate, many firms simply are not interviewing outside of the most elite schools. If firms aren't interviewing at your school, it doesn't matter if you're Top 1% or not--you aren't getting a job.

Posted by: Anthony Sexton | Aug 1, 2010 12:01:19 PM